Complete Transcript: HALO Talks with Jay Faires Posted June 18, 2021

Pete Moore: This is Pete Moore on HALO Talks NYC. I have the pleasure bringing on Jay Faires straight from Topanga, going to talk about the word wellness and the expansion of it, and the interest in private equity and family offices. And how are we going to turn the $7 trillion industry into a 17 trillion dire industry within the next several years? So, Jay, welcome to the show. Thank you very much for having me. Awesome. So let's first start, you know, you run the wellness agency, but why don't you take us back to your entertainment and music roots and kind of how you evolved into being a thought and action leader in the space

Jay Faires: It's been, it's been sort of this fun journey and it's funny, cause we're starting to work with Andre 3000, who was who was an outcast and as he's this, his personal life has taken him toward wireless. And we're excited about that. And then there was a book written hadn't been published yet on my old record label, mammoth records. And as that was being written and I started to read early copies of that, I realized that we're creating this engine with TWA to help wellness founders sort of go from zero to 90. And it, and it really parallels what I have with the record labels. So when I had mammoth and I was head of ANR at Atlantic with Kalman and Jason Flom there at mammoth, I had this engine where we knew how to take an artist from sort of zero to 90, the ones that were really believed them.

Jay Faires: And we work with them long-term and that's very much, it's totally different now, but it's what started off as an accelerator services will probably have equity at 150 companies in five years. We took the equity and 10 last year, what started off as helping people source the right strategic capital, some e-com strategy and entry to China. We've now sort of added some more cylinders cylinders to that engine. And it's, there's a PR marketing and an affiliate side that a lot of our clients kept asking for. So we just built that out and moved it up on the roadmap.

Pete Moore: Awesome. So from a standpoint of looking at entrepreneurs, you kind of think of them as artists or, or, you know you know, their first albums, that first company,

Jay Faires:

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If you it's it's, you know, that the odds of making, I used to never sign a band unless I got like goosebumps in 'em or I got tears in my eyes when I saw it. And that's how I sort of knew I had and, and the odds of an artist making it it's like one in 5 million are literally so that passion, perseverance persistence, that they had a vision that they had, the ability they could write the song, they could do it on stage, they could get it recorded. That's like such a rare art. And yeah, I think there's a massive through line to founders of a company. If you [email protected] that the gut biome company we were just talking about, she announced her a, of 40 million today. And I remember having juice with her five years ago when she was creating business. And it's that a bill and it's going to be a multi unicorn. So that ability to, to take that through that process, it's such a fun thing to be a part of.

Pete Moore: So as you looked at the space, you know, they're obviously very low barriers to entry similar to the music industry. You know, how highly fragmented have you come up with some kind of scorecard besides the, you know, either getting goosebumps or getting a, again, a tear, you know, do you look and say, okay, as an example, you know, we invested in a company in the workout recovery space three years ago, we kind of had enough buzz understanding cause we're around it to know, okay, this is the next big tidal wave. And we're going to basically surf this wave with these two women at, at a group called higher dose, which is an infrared sauna technology company. And everything's kind of played out. So do you feel like what you bring to the table? Not only from evaluating and assessing talent coupled with the ability to see what's around the corner, cause you, you have access to people that are, you know, forming the next phase of technology in the space.

Jay Faires: I think so. I think there's one side of it where it's patents technology, exclusive ingredients. So brain is a brain supplement company that, and peer reviewed science. Like I'd almost, there's that side of it. A brain is a great example of that high Avita, the side origin water company that we love are both great examples on that side. I think, you know, again, if you [email protected] and what she's rolling out, she has Raj as their science co-founder like they're amazing pair and they're licensing IP from Stanford, Oxford, you know, Harvard, the best universities in the world. So they've got a very deep process and then there's, then there's companies like Hannah Connell, life hunter, life.com, a Vedic super food. And like there, it's more, I know the rigor of the ingredients they're sourcing from Butan, et cetera. And, and the buy-in they have is more from the Andy washers of the world who runs the extreme sports program for red bull or to some of the premier athletes in the world are obsessed with the product. So it's it's a bit of gut, but hopefully there's, we're underpinning it with some data and some real analysis.

Pete Moore: Got it. What are your, what's your take on a lot of the celebrities and athletes to now seem to be pulling into rounds of products that they've probably been early adopters into, you know, thinking hyperized or, or thera body do you feel? We take a step back. It used to be athletes and celebrities would come and say, okay, give me X amount of points in the company. You know, here's my sponsorship. If you can't meet this threshold, you know, I'm not going to partner with you. I think now they've gotten very savvy to understand the equity upside in the capital gains nature and their ability to influence these companies. So how, how have those nuances change do they fully appreciate, you know, what it getting involved in an early stage company where it's you gotta do everything you can do. I don't really want to give you, like here's a list of, to do is just do everything you can to help me build a business.

Jay Faires:

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I mean, don't you think that stuff is become more organic and authentic? It feels like it has like it has. Yeah, there's a, there's a really cool company called Omni port green Monday. We, we hosted dinners for him before. It's basically impossible food, the Veja pork, instead of beef, David Young, amazing guy, we hosted dinner SRAM and Bennis four years ago or so before he launched, TPGs already in it, he's raised like 70 million amazing company exploding in Asia. And we w he did. And it's the first time I've been doing an event in like 18 months, but went on Thursday, tasted amazing better for you. I think that impossible. And I sent it out to three, a level like a plus level celebrities, household names to their, to their people. And, and, and knowing that one of them has gone vegan. Another is vegan several days a week. Another is very concerned about the environment and the health, the animals, et cetera, et cetera. They all like responded within 12 hours saying please send me product ASAP. And they all invested in possible and beyond meat early, et cetera. So I feel like that, I feel like those have gotten much more talent, destroys their credibility if they, if they're just latching on to for money. And I think there's enough opportunity. They want to be rewarded if they support it, but they're, they're smart about it.

Pete Moore: Got it. So if someone was to go about, we, we don't, you know, specialize in getting to those types of celebrity investors, you know, are you doing that through the wellness agency? Is there, is that more of a, you know, who, you know, and kind of get into the right lane and, and that kind of happens organically? Or how have you seen those come together? Cause sometimes I see groups and they have a list of, you know, 50 or 60 celebrities or athletes in there. I'm like, well, that that's like a full-time job, just trying to get all those documents and why

Jay Faires: We've put somebody in charge of those. But a lot of those relationships for me are, and, and, and it's it's like Jay-Z's business partner of 20 years, so it's not Jay Z, but he's also Riyadh as manager. And if I text him, there'll be busy to tell, but he'll text me back 10 minutes later. So it's like, it's on a shorthand and then formalize it when it needs to be formalized, if there's engagement. So and it's more just because they were business relationships across music, TV, and film, and I've added over the last 20 years and add repeated clients, ask us to sort of activate those. And we realize we are already kind of doing it. So we just we're formalizing that process. It feels like it's a piece of the equation, it's it? It is a way that products get commercialized successfully in today's world.

Pete Moore: Got it. So w what are some of the, we've got a couple thousand people that'll listen to this. Some of them are, you know, have a PowerPoint and starting to wireframe some user interface. Others are, you know, five, $9. Do we? We had a woman on last week from Santa Monica who has got a natural skincare line by doing like north of six minor revenue. We work with a group called higher doses. I mentioned before, we're probably closer to 20, 25 million of revenue. What's the sweet spot for someone to get in touch with you to say, Hey, you know, I'm at this inflection point, I'm, I'm lacking on these three or four things. And that's where you kind of come in and say, I got you

Jay Faires: Our whole, like, people keep giving. It's not, it's not a perfect analogy at all, but think of us as a bit of Y Combinator meets William Morris or UTA for wellness. So we, we, we took 8% of a company that we're in love with that was literally probably ideation. We've got 10 companies in that sort of accelerator

Page 3 of 8 phase. We will scale that to probably 150 companies over the next, if you look at my history. So 10 years ago, as I got out of lion's gate running music, there was on the board and vested in the first round of mindbodygreen. And it wasn't a home run, but it's like seven acts. If you look at parsley health, Robin's done a, B and a B one gave her the idea to scale up that founder shares in that she's got a real shot at getting to unicorn with this hottest tele-health is, and then probably the last jacket I wrote was Catarina and ritual, but a 6 million round, I think her next round is going to be at like 300 posts.

Jay Faires: And then we started getting equity for services, and we've got people looking at that. So there's, we love young companies. We love young founders. What's the ANR part of the business that we love and trying to find like looking at a lot of that PitchBook data and trying to find the white, white space in the, in the area around wellness. And then, but the other side of it, like, again, we're helping our out on some stuff with seed and she's that thing's a rocket ship. And then that family office conference in Asia that we help program, you know, it's two of the biggest, it's three of the biggest companies that are probably all, you know, early stage for them as you've raised 70 to $700 million sort of pre IPO. So we've got three conversations in the wellness space that have raised at like 1.5, 1.8 and 2.2 billion.

Jay Faires: So, and I, I liked that, like being able to work, it reminds me more of the artist side of mammoth. Like you're working with a founder across their lifecycle and what they need here. Maybe that's more the cylinders or the engine. Like we're, we're very excited about the longterm potential, what the China piece of our business turns into, but I don't recommend anybody goes in there until they're at least at least 10 million of revenue a year and probably more and it's, you know, it's a three to four year commitment. It's not going to happen overnight.

Pete Moore: So given some of the numbers that you just threw out were pretty substantial, capital raises, you know, do you, how much do you view that size of a investment as deemed almost the real competitive advantage for these companies besides the patent? And they got a good brand, you know, if they're sitting with $200 million on their balance sheet, you know, and somebody sit with a similar product with a million on their balance sheet, you know, do you view, as you know, the ability to raise capital actually creates somewhat of a motor on your business, and it gives you the ability to hire people like you and, you know, bringing these

Jay Faires: Types of, but I almost saw that back to you. Don't you always think that's only like you still have to have a business that ultimately works. You still want, like, I know, I know one company, you know, $20 million of losses and, and and, but they can raise the money. And then I know another company that even at a startup phase quick with a quick growth curve you know, and she kept it at breakeven plus, and they had 5 million plus in the bank. So I don't, I in the short-term yes. In the long-term no good answer. I'm a big fan of EBIDTA positive.

Pete Moore: Yeah, that's it. I kind of got brought up on that. So multiples of revenue is a good for someone else to invest that just not me.

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Jay Faires: Yeah. Yeah.

Pete Moore: Gotcha. So what, what are some of the other, what are some of the things, you know, obviously you're under confidentiality with some groups, but what, what are you most excited about over the next year from a, you know, wellness technology or, you know, solving

Jay Faires: The way, the way we look, the way we've built this engine, it should be agile enough because what you and I have seen is that there are these new sectors of wellness that come into it. Psychedelics for mental health and therapy was not on my radar five years ago, saw common. We, there's a fun that we love called Neo Kuma out of London. Three of their first five investments are going to IPO in the first year. And it's, I, I think that if you look at what Christian Anglemyer is doing at a Thai life sciences if you look at bright minds since they pop, I think there some important I, for personal issues that I've had family members or loved ones, I'm like super aware of that. Anything that, you know, addiction treatment is what a $42 billion industry headed to 50 billion.

Jay Faires: It works eight and a half percent of the time. It costs like $50,000. It's, it's like so broken. It's ridiculous. So if there are other things that help with addiction recovery that are more effective, there's some doctors that we're friends with that have treated some of the seal team, six guys, and gotten much better results than, you know, the VA putting them on opiates for the rest of their life. So I think there, there, you will continue to see these big opportunities in Birch psychedelics. I see, as one, but a lot of that was driven by a lot of countries pretty quickly started to shift their point of view on it, with everything that went on with COVID and the mental health crises that were going on.

Pete Moore: Yeah. We've, we've been seeing a couple of business plans on that front and we're, we're excited about the ability to get results. So I think a lot of everything that we're doing here should just be about getting physical and mental results and, and, you know, in the health club industry, sometimes they market to people with a challenge. And I just want to feel better. I want to be part of community like dome, and I want it to be fun. I'll make this more complicated. Do you see, well, one of the things I wanted to ask you about, I wrote down before we got on here was, you know, we've got a lot of bricks and mortar locations that are on the rebound. They're gonna be sustainable businesses as again, whether it's a health club chain or whether it's a studio, do you see the ability for some of the companies you're working with that are branded products?

Pete Moore: They've obviously gone direct to consumer maybe they'll go on more national, but I've got, we've got thousands of, of health club and studio operators and, you know, trainers and instructors that could become brand ambassadors that could be pro shop opportunities to stock product in there. Do you see that merging better at some point? Cause there's always been, you know, almost like a Chinese wall between wellness and health related products and the, the bricks and mortar industry. I guess I'm asking you the question and I might ask you to, to help bridge that gap.

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Jay Faires: Ask me the question one more time.

Pete Moore: So do you think [inaudible] whether we put an initiative together or whether you think it will happen organically? These, you know, unicorn companies should be partnering up with local health and fitness bricks and mortar providers. So should Peloton use LA fitness as a showroom because that person is going to be a member of LA fitness should there be, you know, powdered college in products, you know, for sale at the Equinox point of sale or on their website? I feel like there's not a collaboration of sales to these wellness and halo enthusiasts as much as there could be.

Jay Faires: I think I totally, I think that stuff gets really siloed. Like when we vet early initiatives to Equinox, it was like, that's not my department. Like they couldn't really think outside of a box. It was already defined. And, and, and then, and then, and I'm not more of the physical retail. I'm like headed to Equinox right after this. But like I have no, when I belonged to crunch in business, I have no crunch to Gold's gym. I have no idea what those in-store sales were. And if that was, I would assume that's a valuable piece of it to your point about using talented trainers as a, I don't see the word derogate in a negative light at all, but like almost micro-influencers. So is there some that have the most engaged audiences we're starting to roll that out now. And it's, it's Travis brewer that ninja warrior star and, you know, every ninja warrior in the globe knows who the guy is and worship them.

Jay Faires: So it's more, we use those kinds of people and, and there's three high, high quality products and yeah, that can become a sizeable portion of revenue and income stream for that, for that talent. And it's, and it's much better marketing spend per young companies because they're getting the credibility of those of that talent. Like all that talent comes with. If you've got a Michael, do you got the right 20,000 influencer and you've got a hundred of those and they've got high, high engagement from their core audience, I'll take that any, I know somebody who's got a million followers, but they only, they get like 3% engagement off of each post. So there's a disconnect in there somewhere.

Pete Moore: Yeah. And, and how you set up w with, with your agency, do you have people around the globe? Is this a, you're doing a lot of this out of your,

Jay Faires: In terms of staffing or in terms of clients staffing staffing's mostly west coast, but not some east coast employees that are a Vietnamese Filipino Hungarian descent. Yeah. Yeah. So, and we, we already have, like, even in the companies, we took equity in last year. One was Hong Kong, one was Vietnam and sort of the real real for recycled upcycled high-end shopping. They want to be the real wheel of Southeast Asia and a high propensity of female founders. I don't know that just sort of happened. I think that's where some of the smartest ideas are coming from right now. And

Pete Moore:

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Nobody was no well, we're doing a big event in in Santa Monica at the end of July. So I'd love to have you come join us for that at the Fairmont. We're going to have some top people in the sector talking about what we think the next phase of growth looks like and how we can make sure that more people are covering, as we mentioned before, you know, the wellness industry and the halo sector is actually like an investment thesis in and of itself. So look forward to being an evangelist with you in closing here, do you have any good quotes that you live by, or maybe some music lyrics that resonate with you that, you know, kind of jiggle as look at these deals.

Jay Faires: I listened to music, all that that's too hard. I listened to so many types of music. No, I just, I keep referencing this book. I probably read like six books at a time usually. And I always love reading the Bowie some book, no plan B for your a game. And he talks about how you create 20 year plans. He should've never been in the pros. He should've never come all pro you know, his high school. I had like 27 players on the football team. None of them had ever gone pro and ended up him. And three of his buddies all went pro. So the odds, and it was about setting that intention and setting that long-term intention. And, you know, our, our mission side is that to what you said earlier, big food, big pharma, Western medicine, I think are clearly broken for all the great things you've done.

Jay Faires: I think there is a true moral imperative to push back. I, you, you gave the story about obesity earlier. I always used because I've been to China probably 25 times now, like 25 years ago, Mickey D's Pepsi, et cetera. Weren't in China. They were allowed in about 24 years ago, 25 years ago, diabetes didn't exist in China. There are now 400 million prediabetics there. And I think there's 150 of those stories is the problem like that. It's not just sugar pumped in our food supply, but there is a big opportunity to your investment thesis and its own category. I think people are especially with COVID. I think people are realizing, you know, the, the thing they never talked about and it bugged me without cheat. I'm rambling here a bit, but like they talked about at the very beginning, but we're the fattest fricking nation on earth. And it's like the, they just came out with that staff at 78% of the people that got COVID or technically obese. And they never once said, go exercise, go run some wind sprints uphill. And it's so I think a lot of it is personal accountability to a quote. There's no quote, but I, that book always wins. No plan B we're we're three and a half months into a 20 year plan. And it feels really good.

Pete Moore: Yeah. Well welcome officially to the sector, just because we're here first, but it seems like you've taken over nicely and you got your own little piece of the puzzle here. I'm so excited to have you and, and everybody you bring them with you into the sector is all about helping people. The more entrepreneurs we help, you know, the more people they affect. And, you know, I think we got exponential growth and hopefully eradicate some of those statistics that I find just very jarring.

Jay Faires: And thank you for having me. I'm looking forward to finding ways to work.

Pete Moore: Awesome. All right, man, we'll see you in July and look forward to having this up on the side pier shirt pretty soon.

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Jay Faires: Thanks guys. Appreciate it.

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